Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/818922
M A R K E T H I G H L I G H T: N E W M E X I C O www.REBusinessOnline.com Western Real Estate Business • May 2017 • 39 Albuquerque's industrial market has experienced modest occupancy improvements and increased sales activity over the past three years. For year-end 2016, the industrial market reported 39.6 million square feet of space and a 6.8 percent vacancy rate. This shows significant improvement from the reported 9.1 percent va- cancy rate and a total of 39.1 million square feet in mid-2013. The increase in reported industrial space (+460,000 square feet) from 2013 to 2016 was primarily due to a few existing busi- ness expansions or build-to-suit de- velopments. Albuquerque MSA's employment has been relatively stagnant at about 900,000 jobs since 2010, which has limited demand for new industrial and office real estate occupancy. As of February 2017, the state's unem- ployment rate was the highest in the nation at 6.8 percent, the Albu- querque MSA rate was 6.2 percent, while the U.S. unemployment rate dropped to 4.7 percent. Employ- ment projections from the New Mexico Workforce Solutions division for 2014 to 2024 imply a modest de- crease in manufacturing jobs from about 27,982 to 27,038 by 2024. Other industry types that typically use in- dustrial and warehouse space, such as wholesale trade and warehousing, are expected to experience modest demand increases by 2024. Construc- tion jobs are expected to experience relatively robust growth over the next few years. The biggest recent "win" for the Albuquerque industrial market is the new development of the state-of- the-art Facebook data center in Los Lunas, about 16 miles south of Al- buquerque. Construction is expected to employ 350 construction workers over the next 12 to 18 months. Per- manent employment from this first phase of the project will likely pro- vide 50 to 70 full-time jobs. There has been virtually no specu- lative industrial or office/warehouse development activity in the Albu- querque MSA over the Past three years. Most development activity has been related to expansions of existing industrial tenants within the market, such as Admiral Beverage (219,000 square feet), or the Friedman Recy- cling facility (87,106 square feet). Most industrial and warehouse sales activity over the past few years in the Albuquerque MSA has been focused on owner-user office-ware- house sales to established local com- panies needing to expand or add ad- ditional services. Most of these sales over the past two years have ranged from 8,000 square feet to 40,000 square feet, although SVN sold a 104,000-square-foot FedEx facility in January 2017. Microbrewery developments and expansions have become a bright spot in the industrial market over the past few years. Several newer brew- eries have successfully opened in traditionally industrial districts. This segment of the industrial market is expected to grow by nearly 16 per- cent by 2024. Medical cannabis production has also been a positive growth story for smaller industrial properties within the MSA. These buildings, typically ranging from 7,000 square feet to 16,000 square feet, are often located in lower-demand industrial districts. Buildings meeting the strin- gent Department of Health location requirements and possessing suffi- cient power for indoor growing have commanded triple-net rents at $2 per square foot to $3 per square foot higher than other functionally similar buildings that do not meet the legal criteria. INDUSTRIAL MARKET SHOWS IMPROVEMENT Joel White Senior Advisor, SVN/Walt Arnold Commercial Brokerage For more information, please contact: 505.346.0022 www.pegasusretail.com Visit us @ ICSC RECon Booth N1928T *source ABQ Business First New Mexico's #1 Retail Brokerage Firm* Representing tenants and developers throughout the Southwest A FEW OF OUR CLIENTS: WINROCK TOWN CENTER ALBUQUERQUE, NM PLAZA ENCHANTED HILLS RIO RANCHO, NM VENTURA PLACE ALBUQUERQUE, NM